Home Buyer's Guide
Managing Your Mortgage Payments
Where Your Monthly Payment Goes
Each month, you'll make a monthly payment to your lender that will go toward paying back the amount you borrowed (commonly called the principal), plus interest. Your monthly payment may also include mortgage insurance.
Your mortgage statements will show how your payment is broken up. Initially, the bulk of your payment will go toward paying down the interest on the loan, but over time, more of your payment will go to paying down the principal balance.
If you have an escrow account on your loan, part of your payment will go there. The amount of money that's added to your payment for escrow depends on the amount of your taxes and insurance premiums. Your lender will analyze your account each year to make sure they're collecting the appropriate amount of money, and they'll adjust your payment if they're collecting too little or too much.
Use our amortization calculator to see how much you'll pay toward principal and interest and how additional payments can save you money on interest.
How to Handle a Missed Mortgage Payment
If you're a few days late on your mortgage payment, you likely won't have to pay a penalty. Most lenders have a grace period – usually around two weeks – when you can make your mortgage payment without an additional late fee. If you fail to pay before the grace period expires, however, you'll likely pay a penalty. Plus, a late payment will lower your credit score.